British oil major BP PLC reported better than expected second quarter earnings Tuesday. $BP net income was $8.45bn (£6.9bn), higher than $6.8 billion average forecasts and $2.8 billion in the year-ago period. BP’s profits were the second highest for the second quarter in the firm’s history. Shares in BP rose 3.7% in morning trading in London. The report follows other energy giants reporting massive profits this quarter, Energy giant ExxonMobil, the largest U.S. oil company, reported its second-quarter profit rose to $17.9 billion, Chevron, the second-largest U.S. oil company said it made a record profit Friday of $11.6 billion, Phillips 66 reported Q2 earnings of $3.17 billion or $6.53 per share and Shell reported its second consecutive record quarterly profit of $16.7 billion.
BP PLC ADR (NYSE: $BP) Reported Earnings Before Open Tuesday
$0.4358 Beat $0.3450 EPS Forecast and $69.51 Billion in Revenue
Earnings
BP plc reported second-quarter 2022 adjusted earnings, with a metric similar to net income that U.S. oil companies report of $8.5 billion. That compared with a $6.8 billion average forecast of 28 analysts and $2.8 billion in the year-ago period. The profit was powered by higher oil and gas prices.
Highlights
BP Q2 22 Earnings:
- Adj EPS: $0.4358 (est $0.3450)
- Revenue: $69.51Bln
- Adj Net: $8.45Bln (est $6.73Bln)
- Increases Dividend/Share 10% To 6.006C
- Intends To Execute A $3.5Bln Share Buyback
The second quarter featured strong oil trading partially offset by lower natural-gas profits, hurt by an extended outage at the Freeport liquefied natural-gas shipping facility in Texas. That outage is causing a “significant reduction” in LNG cargoes that BP said it is receiving from the site.
Europe’s energy crisis and Russian threats with NS1 has enforced necessity to fill natural-gas storage supplies ahead of winter. Energy majors like Shell and BP have cut back on their own gas usage. Shell Chief Executive Ben van Beurden said last week that Shell has reduced by 40% or more its natural-gas input to refineries and chemical plants in the Netherlands and Germany.
BP CEO Bernard Looney said in an interview Tuesday that BP has reduced its gas usage at European refineries by 50% in recent months, so far without hurting production.
Russian Loss
BP has emerged strongly after reporting a loss for the first quarter of the year tied to the company’s decision to exit its Russia holdings. BP took a half-year $25.5 billion (£19.9bn) hit from its move to exit its near-20% stake in Russian government-controlled oil producer Rosneft in response to the Ukraine war. This hit was the biggest by companies pulling back from Russia, dragged BP to a $20.4 billion headline loss for the first quarter.
BP said at the time that the loss didn’t change its strategy or curtail its plans to distribute cash to investors while reducing debt.
Dividends and Buybacks
BP boosted its dividend and share buybacks. For the second quarter, BP increased its dividend by 10% and said it is on track for planned annual dividend increases of about 4% through 2025. The company said it would buy back another $3.5 billion in shares by third-quarter results, on top of $3.9 billion in buybacks during the first half of this year.
Dividends are sought after in energy majors as we saw with both US Oil giants Chevron and ExxonMobil in their reports.
Outlook
BP executives said they expect high oil prices to continue through this quarter, and the company is investing steadily in sustaining or increasing production levels, including in the Gulf of Mexico. BP executives said they are looking at the proposed U.S. climate bill as a reason for increased confidence that the U.S. will issue new leases for offshore drilling in the Gulf.
In a conference call he added: “In terms of cost of living we all have to recognize that it’s a very, very difficult place for people, not just, by the way, in the UK but across of the world right now.
“We understand that, we get it. Our people inside the company get it, they want to help.”
Mr Looney said BP was “backing Britain” by investing £18bn in the country this decade.
Source: BP
Live From The Pit
From The TradersCommunity News Desk